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Tort reform and HMOs

Most physicians who talk about "tort reform" today are talking about changing the mechanics of malpractice suits against doctors. I wonder, though, whether we're not overlooking some important issues that have nothing to do with malpractice liability caps.

Dr. Wax says the following:

Managed care plans require that a physician accept all patients who choose him, dictate how often he may see the patient, the amount he'll be paid and when, and, in many instances, what he can prescribe. They can rescind previously paid compensation at will, and do. In reality, HMOs are practicing medicine since they must approve every test, course of treatment, and referral to a specialist, yet they are rarely, if ever, legally responsible. Meanwhile, the physician is left to suffer the consequences of any malpractice suit.

Back in the late 90s this kind of complaint seemed to be a lot more common. Now, though, you almost never hear it anymore. The only issue that seems to matter these days is malpractice reform, specifically liability caps and the rising cost of malpractice insurance. What ever happened to the HMOs?

It might be that most HMOs have eased up on their oversight of physician decisions and moved away from the most intrusive forms of utilization review. It might be that physicians have accommodated themselves to making treatment decisions within the boundaries set by the patient's health plan administrator. The problems with HMOs might be as bad as they ever were, but the problems with malpractice premiums may have gotten so much worse that physicians feel they need to deal with this problem first and postpone their battles with the HMOs until later.

The fact is, though, that an HMO's legal ability to pressure physicians about patient-specific medical decisions remains largely intact. An HMO's immunity from liability for its participation in medical decisions also remains intact. The physician remains liable for the consequences of treatment decisions that he or she may not be solely responsible for making. If a patient has a bad outcome and wants to sue someone, in most cases the only readily available target is the physician.

It is true that the physician remains the only individual authorized by his license to order a particular treatment. But this doesn't mean that medical decisions are made solely by the physician. When an HMO utilization review concludes that a physician's choice of treatment will not be covered, the practical effect is almost always that the physician must select another treatment or the patient will not receive any treatment at all. When the HMO denies one treatment and simultaneously offers to approve an alternative treatment after reviewing the details of the patient's medical record, the HMO is even more directly implicated in the medical decision. The HMO's power under the health plan documents to pay or not to pay for a particular treatment is every bit as consequential as the physician's power under his license to order the treatment (at least for expensive treatments that the patient cannot pay for directly).

Solely as a matter of accountability, we still need to reform the current laws that make HMOs virtually immune to patient lawsuits. But there may be additional reasons for reforming these laws that relate to the current hubbub over physician malpractice premiums. If injured patients could go after their HMO, many of them might choose this route instead of concentrating on their physician. It's at least an interesting empirical question: how many malpractice lawsuits against physicians have been filed or continued in part because the patient's HMO was unavailable as a legal target? If HMOs could be held accountable in court, fewer physicians might be scapegoated in court.

Of course, exposing HMOs to liability might cause them to exercise more intrusive control over physician practice. This argument was made by the AMA in the context of a proposal to impose enterprise liability on health plans and hospitals that was part of an early draft of Clinton's health care reform legislation. Is it valid? Even if it is, would it result simply in more intrusion by HMOs into medical decision-making, or a shift of the focus of those intrusions from cost-containment exclusively to some combination of cost-containment and quality assurance? If the latter, that might not be such a bad thing for patients.

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